Alarm bells ring at Eurotunnel

Contributed by editor on Feb 19, 2006 - 12:07 AM


Financial pundits are warning that cross channel tunnel operator Eurotunnel is inching towards a collapse as its auditors have now resorted to warn investors that it is no longer a going concern.

The company has received approval from its creditors to continue seeking restructuring its 6.3-billion-pound debts until the end of March, but it is reported to be nowhere near a deal.

Eurotunnel's chairman Jacques Gounon had proposed that all but 2.2 billion pounds of the company's debt should be simply written off. He has later intimated a group of creditors that the company could handle closer to 3 billion pounds.

The auditors' warning has come because the major debt repayments are due in 2007 and the company is in no position to meet these repayments because of insufficient cash flow.

The company said in a statement that all its senior creditors and 91.32 per cent of its co-financiers had voted giving it time till end of March to continue with the talks. The statement said: "It will allow Eurotunnel to present the financial restructuring framework, agreed by the group and the ad hoc committee o­n 31 January, 2006, to the other creditors, provided that they sign a confidentiality agreement to preclude them from any trading in the debt or equity of Eurotunnel."